Darini Rajasingham Senanayake
South Asia’s Arab Spring is here, amid global Cold War tensions and slow tectonic shifts in power and wealth east, to Asia and the Indian Ocean Region, hastened and heightened by the Russia-Ukraine conflict.
As Foreign Minister of Russia, Sergi Lavrov, met Indian Prime Minister Modi last week, western pressure mounted with almost simultaneous visits from various British, European and US emissaries who cautioned and questioned Delhi’s historic and close ties with Moscow.
Simultaneously, Pakistani Prime Minister, Imran Khan who had visited Russia on a pre-planned trip a few weeks earlier was subject to a “no confidence” motion which was later deflected with the dissolution of Parliament. Khan pointed a finger at the United States as the foreign power behind events in Islamabad and a Regime Change operation through the buying of politicians and political parties.
Prime Minister Khan showed material evidence of the ‘foreign conspiracy’ and named names; Assistant secretary of state for south and central Asian affairs Donald Lu. A letter from Washington dated a day before the No Confidence Motion was actually tabled had stated “Pakistan would be forgiven if Imran Khan lost the No Confidence motion!” Washington had foreknowledge of events in Islamabad.
Ironically, Prime Minister Khan who saved Pakistan’s economy from the economic destruction that almost 2 years of WHO recommended Covid-19 Lockdowns caused in Sri Lanka and India, and protected the Pakistani people and economy by refusing to lockdown Pakistanis stating that the resulting poverty would kill more people than the lab made virus, has been accused of economic miss-management even though he was proved right. The World Bank has lauded PM Khan’s handling of the Covid Panicdemic in Pakistan.
Imran Khan’s friendship with China and recent visit to Moscow and Mr. Putin he noted had erked Washington and the reason that Pakistan was targeted. Washington however, has been much softer on its Indian Quadrilateral Group QUAD partner’s friendship with Russia. India and Pakistan seemed to be on the same page vis-à-vis Russia this time! Indeed, there may be a new Asian confluence with China, India and Pakistan all refusing to follow NATO condemnation of Moscow following the NATO debacle in Afghanistan last year.
Staged dollar Crisis and Neocon Playbook Protests in Sri Lanka
The same week that Pakistan’s Imran Khan faced a No Confidence motion, Sri Lanka to saw an Arab Spring style ‘colour revolution’ unfold with protests against former US citizen President Gotabaya and the Rajapakse brothers’ regime, given the soaring cost of living, fuel and food shortages due to a much hyped dollar shortage in the country and downgrades by rating agencies. Of course Sri Lanka’s debt is peanuts compared to the America’s whopping 20 trillion.
It is important to remember the Big Picture to understand the principle international actors and reasons behind the current debt crisis also given a lot of miss-information about China being responsible for Sri Lanka’s debt crisis. Sri Lanka in REAL TERMS is one of South Asia’s wealthier countries, with high Human Development and Social Indicators. The current debt to be paid in this year, in 2022, is USD 6.9 billion. Intentional Sovereign bonds (ISB), makes up the largest part of Sri Lanka’s external debt.
Repeated cycles of borrowing from capital markets and resort to International Sovereign Bonds (ISB), by successive government with the UNP led Yahapalanaya regime being the worst offender (2015 -2019) with the last year of the Yahapalanaya regime in 2019 (the years of Bondscam and of the mysterious ISIS hybrid economic war EASTER attacks on Sri Lanka), being the worst years of ISB borrowing, have made ISBs the largest source of foreign funding for Sri Lanka.
AT THIS TIME, it is a USD 6.9 billion ISB debt payment that is owed and owned entirely to United States based International Sovereign Bond (ISB) traders, which is principally crashing the Lankan rupee and causing the Default. This debt is to be paid to US capital markets and ISB traders Senior Economist and head of the Institute for Policy Studies in Colombo Dr. Dushni Weerakoon has clearly stated. Hence, China is not the source of Sri Lanka’s debt trap but may be its target!
Sri Lanka’s debt to GDP ratio, one metric used to determine the stability and health of a nation’s economy is said to be at 110 percent, and is cited as one of the reasons for rating agency downgrades, leading to difficulty borrowing to sustain debt servicing and default, but this too may be kept in perspective. The top ten countries with the highest debt to GDP ratio according to the Word population review are: https://worldpopulationreview.com/country-rankings/debt-to-gdp-ratio-by-country:
- Venezuela — 350%
- Japan — 266%
- Sudan — 259%
- Greece — 206%
- Lebanon — 172%
- Cabo Verde — 157%
- Italy — 156%
- Libya — 155%
- Portugal — 134%
- Singapore — 131%
- Bahrain — 128%
- United States — 128%
Sri Lanka is not on this 2022 list of worst offenders! So, again questions arise regarding the basis of the Rating Agency downgrades which make re-financing and rolling over the relatively small debt of this otherwise relatively wealthy country in the South Asian region with high social indicators, harder.
In the final analysis such downgrades are based on Subjective considerations of “CONFIDENCE” in the ability of the county to pay its debts by Rating Agencies, as noted by Dr. Nishan De Mel of Verite Research among others. Sri Lanka it appears has been “pumped and dumped” from the Lower Middle Income Country Trap (MIC trap)! The Washington Consensus and UN system up graded it to a lower Middle income country (MIC) in 1997, thus making it ineligible for low interest borrowing and development aid and promoted borrowing on Capital markets– like other countries that have been placed in the MIC trap of Capital Markets and ISBs. In this set-up the island’s corrupt and incompetent political leaders did the rest of the job – forcing it back into poverty and into default and the IMF’s clutches at this time.
Finally, this negative confidence assessment of Sri Lanka’s ability to pay her debts may well be a co-efficient of geopolitical rather than purely economic factors and considerations by the United States, fronting the Washington Consensus and its OECD-Paris Club “Aid” donors.
This, as the US Petrodollar’s “Exorbitant Privilege” as Global Reserve Currency comes under increased pressure in the Asia region with the Russia-Ukraine conflict and moves to de-dollarize and trade in a basket of currencies and source oil, gas and energy needs from Sanctions hit Russia by circumventing the USD.
The IMF’s effective takeover of the country’s economy policy and process in the wake of the current Default mean that the island loses economic Policy Autonomy and Sovereignty. Simultaneously, default and the IMF role in restructuring Sri Lanka’s debt in negotiations with Western lenders means that the Washington staves off a perceived China Threat in this strategically located island nation at the centre of the Indian Ocean Region.
Has, Sri Lanka become, like Ukraine, a theater of US proxy war this time in the Indian Ocean Region as the New Cold War escalates? Is Sri Lanka once a guinea pig, caught in the tentacles of the American Cyborg, Doctor Octopus (DOC OCT) of Spider Man movie fame?
IMF as Deus ex Machina
A few weeks prior to the Default in April 2022, the Sri Lankan rupee was crashed and lost 70 percent of its value– a precursor to an International Monitory Fund (IMF), “bailout” or is it “bail in” negotiations in Washington DC? A fuel and electricity crisis materialized after the rupee crash and there were long queues at Petrol sheds and gas shops.
The island’s power plant in Kerawelapitiya had been sold to a US company in September 2021, purportedly to convert it into clean Green American Liquified Natural Gas (LNG) plant, and Sri Lanka’s Energy Security has been gutted in the past several year by an unplanned rush to renewable energy following the United Nation’s CoP 26 “Climate Catastrophe” narrative that also was instrumental in the Organic Fertilizer Policy switch that wreaked the agriculture harvest and farmer’s livelihoods.
The Rajapakse regime’s Agriculture and Energy policy debacles that compromised the island’s Food Security and Energy Security leading to food and fuel shortages, were ironically designed and implemented in the name of reversing climate change following the UN’s CoP conferences and ‘Climate Catastrophe’ narrative, following foreign expert advice, although Sri Lanka’s contribution to global carbon emission is minute.
These Agriculture and Energy sector policy debacles occurred during the other policy debacle in the Health Sector, amid Covid-19 fear psychosis and Extended Lockdowns promoted on Social Media and militarized mass injection campaigns of the general public in 2020-2021, when space for protest were minimal.
Were these simultaneous policy debacles in the health, agriculture and energy sectors, part of a coordinated, Full Spectrum Dominance (FSD), Over the Horizon (OTH) Economic war Operation dove-tailing with the Covid-19 bio-warfare global operation in the strategic island nation that has been blighted by corrupt politicians, business elites and governments? Ironically, President Gotabaya Rajapakse was rewarded for decimating Sri Lanka’s Energy and Food Security with an invitation to the 76th UN General Assembly in New York, September 22, 2021 where he boasted about his achievements in climate change reversal to avert climate catastrophe by decimating Sri Lanka’s energy and food security!
Prior to his departure to addressing the UN General Assembly President Rajapakse had in a midnight deal signed away the Kerawelapitiay power plant to an American New Fortress company! A sequential Staging and compounding of policy debacles with advice from UN and other international development experts by the Rajapakse regime, appears to have led to a perfect storm in the strategic Indian Ocean island – leading to a seemingly unavoidable the DEFUALT?
From a broader perspective then Sri Lanka’s crisis has multiple international aspects and appears more about Geopolitics and less about Economics as the island has long been in the cross-hairs of great power rivalry due to its strategic location on major SEA LANES OF COMMUNICATON (SLOC) in the Indian Ocean Region.
‘Valuable Real Estate’ in the Indian Ocean Region
Since the 2019 staged Easter Sunday attacks on Tourist hotels and the Economy using religion as a smokescreen and the island’s rejection of America’s Millennium Challenge Corporation (MCC) Compact, Sri Lankans have been subject to a form of hybrid ECONOMIC WARFARE. For the past four years there have been Lockdowns in the months of March April on some pretext, as well as, Cyber and Maritime trade disruption also with burning and sinking ships MV Pearl and Diamond last year.
Sri Lanka was once referred to as a “valuable piece of real estate” by Alice. G. Wells and appears to be vital for the maintenance of America’s Free and Open Indo Pacific”. So too the Sinhala Diaspora appears to have been Weaponized: Basil Rajapakse, brother of the President and Prime Minister and Minister of Economic Disaster in Sri Lanka is a US Citizen. Governance in Sri Lanka the past three years has been a family affair of the hybrid American-Sri Lankan Rajapakse family. Basil Rajapakse was set to fly to Washington to the International Monetary Fund (IMF), after a staged parliamentary debate on April 8.
Remarkably the Sri Lanka Government, many in the Opposition and some protestors see the IMF as a sort of ‘deus ex machine” Solution to the crisis triggered by an apparent dollar shortage after rating agencies downgraded the island in concert last year making it difficult for the government to roll over the 7 billion debt to be paid this year owed primarily to Sovereign Bond traders. Sri Lanka’s debt to GDP ratio is around 110 percent partly aa a result of economic mismanagement and the Covid policy debacle of the past 2 years. But then Japan’s Debt to GDP ratio is over 200 percent! Compared to America’s 20 trillion of debt, Sri Lanka’s debt it peanuts, around 67 billion.
Is Sri Lanka whose currency steeply depreciated as a precursor to IMF negotiation in March because of an apparent dollar shortage to clear goods and fuel from the port being targeted? The saucy island had the temerity to refuse the US Millennium Challenge Corporation (MCC) Compact and Status of Forces Agreement in 2019 and since then Economic crisis has escalated to the point that default and an IMF bailout now appears inevitable. The island was repeatedly downgraded by Rating agencies and could not roll over it debt. The Euro-American Financial system comprises rating agencies, sovereign bond traders and of course the Washington Consensus and OECD or Paris Club.
To be fair the IMF has never pretended that it cares about poor people or inequality, but rather prefers to impose austerity measures on the common people (and the Protestors), that should be imposed on luxury-living politician and business elites with, for and by which the IMF works. Is then IMF a Fake Solution that is offered by ALL political parties –who are bought for a National Government yet to be formed?! From a longer perspective IMF is part of the STRUCURAL problem of Global inequality and poverty embedded in the international Development Aid System and Architecture and one of the reasons that Sri Lanka like many other Global South continue to lurch periodically from bailout to bailout!
Unlike Pakistani Prime Minister, Imran Khan, known for his courage and integrity on an off the cricket field, the hybrid American-Sri Lanka Rajapakse Regime would not point a finger at the external actors and networks behind Sri Lanka’s 2019 Easter attacks, the blow to the tourism dependent economy followed by the lockdowns and travel warning and the compounding Economic debacle of the past 3 years.
4 years of Hybrid Economic War: Debilitating Food and Energy Security
Retrospectively, the mysterious ISIS claimed Easter Sunday attacks on coastal Hotels and the Tourism dependent economy in 2019 ten years after the defeat of the LTTE and the dawn of peace in Sri Lanka may be seen to to herald the on-set of hybrid Economic War in Sri Lanka. The attacks used religion as a cover to hit China’s Shangri La Hotel where the leader Zaharan and another suicide bomber perished, signaling this was the most important target.
The hybrid war style Easter 2019 attacks were followed by 2 years of Covid-19 bio war and fear narratives, and economically destructive Lockdowns in 2020, 2021. There was massive health sector expenditure (almost 38 percent of budget), also on purchase of 16 million useless and expensive Pfizer booster injections by Basil Rajapakse, Head of the Covid Task Force and in 2022 there were no funds to purchase essential drugs. All health institutions were captured also through Digital Colonialism by external actors promoting the Covid narrative and LOCKDOWNS (Great Reset after Event 201).
For the past 4 years a pattern has emerged: Every March-April a new round of destabilization starts and Since 2019 Sri Lankan citizens have been routinely put in LOCKDOWNS and CURFEWS. Meanwhile foreign navies stage war games off the island’s coasts of this strategic island as was the case with the Malabar War games that beached and killed pilot whales while Lankans were in lockdown in 2020. This is a pattern.
Has the island been systematically targeted because it sits on the Indian Ocean Sea Lanes of Communication (SLOC) vital to secure America’s “Free and Open Indo Pacific” after it refused the MCC compact and SOFA?
Geography is history in this strategic island in the Indian Ocean. In a similar manner, Pakistan was targeted for regime change after Imran Khan’s visit to Russia.
Lawfare: Solutions when Conspiracy Theories come true
We live in a post-Covid world when conspiracy theories increasingly seem to come true. Protests may be useless without creative alternatives to the proffered IMF “solution” that would also require foreign legal firms taking over the island’s economic negotiations.
Strategic Sri Lanka may need to look to Asia for help and development at this time of national humiliation and develop a strategy to de-dollarize and trade in a basket of currencies. It may consider an independent Economic, Trade, Energy and Foreign Policy and source its oil, gas, and other energy needs from Russia at discount prices like India is doing.
Going to the IMF and its aid conditionalities means that Sri Lanka loses policy autonomy and sovereignty and be unable to have an INDEPENDENT FOREIGN, ECONOMIC, TRADE or ENERGY policy that serves the interest of her citizens.
At this time Sri Lanka seems to be subject also the phenomenon of Lawfare and a Full Spectrum Dominance (FSD) remote Over the Horizon (OTH) operation. Lawfare, as documented in the regime change operation against Brazil’s leftist President Lula by the Central Intelligence Agency (CIA) who he has identified is the process whereby a country’s legal system is subverted and weaponized against justice.
At this time, there is a pattern of fundamental rights cases against government actions being dismissed while the people are distracted with food and fuel shortages and or Covid-19 lockdowns. Petitions that have been refused leave to proceed sometime by five judge benches include challenges to the sale of the Kerawelapitiya Yugadhanavi Power plant at this time of Energy Crisis to a US company name New Fortress in a midnight deal by the President, the Central Bank Bondscam cases, the cases challenging the Covid -19 mass injections Gazette of 2022 which would impose digital vaccine certificates and discriminate those who are not injected from public places under a Fake Health Emergency etc. that would also enable surveillance, stop crowds and protest, stymie democracy and promote digital colonialism and control of citizens.
Is as Imran Khan said of Pakistan, Sri Lanka also being targeted in an Over the Horizon (OTH) Full Spectrum Dominance (FSD) operation as Cold War returns to South Asia with America’s ominous “Pivot to Asia” and renaming of the Indian Ocean the “Indo-Pacific” and putative disengagement from Afghanistan?
THUPPAHI thanks David Sansoni in Sydney and Avishka Mario Seneviratne in Colombo for enabling the presentation of the Table and the illustrative cartoon though their technical skills. May Easter eggs reach you in plenty, guys.